Co-op banking profits hit by writedown in UK

The Co-op’s banking business said its balance sheet remained strong today, despite a £31.8m (€40.37m) investment write-off.

Profits at the banking arm of Co-operative Financial Services (CFS) – which yesterday withdrew one of its mortgage products due to unprecedented demand - slumped by a third to £50.4m (€64m) during the year ended January 12.

The £31.8m (€40.37m) hit came from from what the bank said was a “relatively small” exposure to structured investment vehicles.

But Manchester-based CFS said it maintained a strong balance sheet, with liquidity ratios “substantially” higher than regulatory requirements.

Its mortgage book also enjoyed “very low” level of defaults, reflecting the low loan-to-value ratios, the firm said. Before the write down, banking profits were up £5.9m (€7.5m) to £82.2m (€104.4m).

Total shareholder profits for CFS – which also provides general insurance - were up 6.3% to £155.4 m (€197.3m).